Revisions won't delay results, says Zurich

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Zurich Financial Services Australia does not expect the release
of its 2004 financial statement to be delayed, though it has
admitted it will have to correct errors in the accounts for the
previous four years.

The company lodged four separate "request for correction" forms
with the Australian Securities and Investments Commission last
month. It said there were errors relating to the accounting for a
reinsurance arrangement.

The proposed corrections follow an internal review that was
prompted by investigations by the corporate and prudential
regulators.

A spokesman for Zurich said the final corrections had not been
signed off.

"We are still in discussion with the regulator," said Zurich's
media manager, Rob White.

"We want to co-operate with them fully and put the investigation
behind us as soon as possible."

Mr White said the request for correction notices were part of
that process but they would not delay the preparation of Zurich's
2004 financial statements, which are typically released in early
April.

The company does not expect the the corrections to have a
material financial impact.

A spokeswoman for ASIC said the regulator could not comment on
the matter because it related to a current investigation.

The Australian Prudential Regulation Authority also declined to
comment.

Financial reinsurance is not illegal but it must be accounted
for correctly. It hit the headlines during the HIH royal commission
in 2002 when a contract sold by General Reinsurance Australia to
FAI was found to have propped up FAI's balance sheet, contributing
to the collapse of HIH. Companies use the contracts as a type of
deposit arrangement, allowing them to defer premiums to later years
but take the benefit of the recoveries upfront.

It is understood the Zurich reinsurance arrangement under
investigation was made in 2000 and was sold to the company by
General Re.

In its 2000 financial accounts Zurich reported reinsurance
recoveries of $289.6 million. That dropped to $114.7 million in
2001, $112.3 million in 2002 and $74 million in 2003.